The European Commission has decided to send a letter of formal notice
asking the UK for full information on its execution of a European Court
judgement requiring it to implement EU law on reorganisation and winding-up of
insurance undertakings. It has also decided to ask Portugal formally, by means
of a reasoned opinion, to remove a requirement for architects holding
qualifications from other Member States to take an examination before they can
practise in Portugal. Finally, the Commission has decided to issue reasoned
opinions, the second stage of the infringement procedure, to Denmark, Austria,
Finland and Sweden because their Bilateral Investment Treaties (BITs) with
non-EU countries are incompatible with the EC Treaty. If no satisfactory reply
to a reasoned opinion is received within two months, the Commission may decide
to refer the Member States concerned to the Court.

Insurance: UK failure to implement EU law on the winding up of insurance
companies

The European Commission has decided to send a letter of formal notice asking
the UK for a full explanation of the measures it has taken to implement fully
the European Court of Justice’s judgement (Case C-164/04, 18 November
2004) requiring the UK to write into national law Directive 2001/17/EC on the
reorganisation and winding-up of insurance undertakings (“the Winding Up
Directive”). The UK acknowledged that it had not at the time of the
judgement informed the Commission of how the Directive had been written into
national law in so far as the Lloyd's market and Gibraltar were concerned.

The UK government has since informed the Commission about legislative
measures to ensure the implementation of the Directive in Gibraltar. Legislative
work to apply the Directive to the Lloyd's market has been initiated and a
public consultation document was published in December 2004. However, as that
part of the legislation has not yet been enacted, the Commission must consider
that the UK has still failed to fully implement the Directive. Should the UK not
inform the Commission of the enacted legislation concerning Lloyd's, the
Commission may decide to take the next step in the infringement proceedings
(reasoned opinion) and if necessary after that to request the Court to impose a
fine.

Under the Directive, where an insurance undertaking with branches in other
Member States fails, the winding up process must be subject to a single
bankruptcy proceeding initiated in the Member State where it has its registered
office. The Directive is designed to guarantee protection of policyholders in
such instances.

Professional qualifications: Portuguese requirement for architects
qualified in other Member States to pass an examination breaches EU law

The Commission has decided to send Portugal a reasoned opinion over its
recognition procedures for architecture qualifications issued in other Member
States.

Directive 85/384/EEC requires Member States to recognise automatically and
unconditionally architecture qualifications covered by the Directive and issued
in other Member States. Each Member State must accord to holders of the relevant
qualifications from elsewhere in the EU the same rights as those bestowed by its
own equivalent national qualifications.

Nevertheless, holders of qualifications covered by the Directive must take an
entrance exam before they are admitted to the Portuguese Institute of Architects
(Ordem dos Arquitectos), membership of which is in practice necessary to work as
an architect in Portugal. In the Commission’s opinion, this is in breach
of the Directive and is a major barrier to architects with qualifications from
elsewhere in the EU who wish to move to Portugal.

Portugal maintained in its reply to the letter for formal notice (first stage
of the infringement procedure) that the requirement for an examination is not in
breach of EU law. But the Commission contests this view and has therefore
decided to pursue the case by sending a reasoned opinion.

If European law on the recognition of professional qualifications is not
respected, qualified persons run the risk of not being able to exercise their
right to practise their profession in any of the Member States. Moreover, if
they block Europe-wide recognition of professional qualifications, the Member
States are reducing the scope for their own citizens and their own firms to
choose qualified people from other Member States to provide services on their
territory.

The Commission has decided to send reasoned opinions to Denmark, Austria,
Finland and Sweden because Bilateral Investment Treaties (BITs) they signed with
non-EU countries before they joined the European Union are incompatible with the
EC Treaty. Sweden has 17 such BITs, Finland eight, Austria six and Denmark one.
BITs contain provisions permitting the free transfer of funds relating to
investments between the signatory countries. In the Commission’s view
these clauses cut across the EU Council of Ministers’ exclusive powers to
adopt on behalf of the EU as a whole measures on the movement of capital to and
from non-EU countries (by virtue of Articles 57.2, 59 and 60 of the EC Treaty).

Member States are obliged (according to Article 307 of the EC Treaty) to take
all appropriate steps to eliminate such incompatibilities with the EC Treaty
arising from international agreements they have concluded before their
accession.

For the latest information on infringement procedures involving the Member
States, please consult the following website: